The presentation of your Investor Pitch Deck can be one of the most daunting things you must endure as an entrepreneur. Therefore, the pitch deck structure and presentation are critically important.
Investors are much better at negotiations than you are; after all, this is what they do, and they do it daily. You, on the other hand, rarely do it. So it would help if you avoided certain expressions when approaching potential investors to invest in your new company. They are traps that make you look weak or dig a hole so deep that you’ll have a difficult time finding the light to exit.
What is a pitch deck used for?
The story you tell about your idea and concept is what will ultimately determine if your Pitch Deck is appealing or not. A Pitch Deck (in cases referred to as a Prospectus), a brief presentation (created using PowerPoint and normally no more than ± 20 pages), provides your audience with a professional overview of your Business Plan.
You will generally use your Pitch Deck face-to-face or online meetings with potential investors, customers, partners, and co-founders. However, if your audience has no time or inclination to read through a lengthy Business Plan, an Investor Pitch Deck will certainly be the best alternative.
Before you walk into that presentation or investor meeting, you ought to know your lines, your slides, your data, the questions investors will ask you, and even the questions you should be asking to stand out and find a good-fitting funding partner. Yet, you will blow your chances of securing funding if you make the following mistakes.
Pitch Deck No-No #1 – We Have No Competitors:
If you believe that, you should not quit your day job. Every business has some competitor, even if it is only an indirect competitor of some sort. Even non-profit organisations have competition. If you haven’t found them yet, then you haven’t done enough research. You are going to look like a total novice and lazy entrepreneur. Who wants to fund one of those? Also, never talk poorly about your competition. It is a turn-off.
Always be respectful as the world is small, and those competitors may get big enough to acquire your own business at a price that could be life-changing. Everybody has competition, even if they offer a substitute product. A sophisticated investor will be turned off immediately if you imply you have no competition. Every startup is established because the founder has thought of something new. It is either:
- a new product or service,
- a new market for an existing product or service,
- a new way to deliver an existing product or service, or
- a new way to address a market/customer problem/need/headache.
Pitch Deck No-No #2 – You Need to Sign This NDA:
You might think you have one of the only unique ideas in the world and that letting it out is the biggest risk to your future. It’s not. First, many investors I’ve spoken to clearly don’t think there are really that many unique ideas. Someone else is thinking of pretty much the same thing right now. Someone else did yesterday. Someone else will also think of this idea tomorrow. With 7 billion people on the planet, there are bound to be similar “bright and unique ideas”.
The big difference is in the execution and the founding team that can pull it off. So, investors can’t sign an NDA because they can’t guarantee they won’t fund a similar idea from someone else. There is also too much legal risk they can’t control. It also shows that you don’t trust them. Typically, they would sign an NDA when you do due diligence with them. What should be more important is getting your idea out there and funding it before and better than your competition.
Why don’t investors invest in your startup pitch deck? In this article, Pitch Decks: Brutal Reasons You Don’t Get Funded, we explore some reasons.
Pitch Deck No-No #3 – All I Need is Your Money; Not Your Opinions:
Investors usually consider their business acumen to be of considerable value to companies. When you make a statement like this – or imply it through your actions – you will alienate the investors, and they will not invest. If that’s true, a business loan might be a better choice for your startup.
Pitch Deck No-No #4 – This is Such a Sure Thing it Can’t Fail:
Most startups in South Africa do fail. 7 out of 10 go out of business within three years. All were “sure things”. Even those carefully vetted and well-funded by savvy investors fail. The majority of an investor’s bets aren’t going to work out. Only one is likely to be a huge winner. There are too many variables. Besides, being ready to be an entrepreneur means you have to be ready to fail. You have to be willing to test and try. You’ll always be tweaking. You might even have to start over. So paint the best- and worst-case scenario and what you expect. Just don’t try to sell this as a guaranteed win. They know better.
Why couldn’t your business get funded? Even if you think you’ve got the Best Business Plans, it may still not get funding. Our article, 10 Alarming Reasons Why Your Business Plan Was Rejected, explores possible reasons.
Pitch Deck No-No #5 – My Time is Worth Just as such as Your Money:
During an investor pitch, investors often ask, “How much money have you raised to date?” They want to know how much cash has been invested in the company. All founders devote enormous hours to birthing their companies, but labour hours don’t count.
Don’t try and convince an investor that you have already invested months in sweat equity, i.e. your time. So what? Who cares? That’s not tangible. Yes, you can (and should) offer to work for no cash compensation (this could encourage investors to invest).
But don’t go into a monologue explaining how your time is worth R800,000 per year, so you have thus far invested R800,000 into the company by working for a year without salary. Like banks, angels and venture capitalists want to fund ventures that are already on great footing. Their capital will just amplify the good results. If you’re begging, it’s a sure sign you are already in trouble. You either aren’t getting the traction for your product, no one else is willing to fund you, or you’ve been mismanaging your money.
Want to see some pitch deck examples? Visit the Portfolio of JTB Consulting.
Pitch Deck No-No #6 – I Will Guarantee You an X% Return on Your Investment:
Seriously? Uhm, mayday, mayday, we have a huge problem! You cannot guarantee anything to your investors. When you state that you “guarantee” such a return, you are inviting a lawsuit from investors if such a return is not delivered. Do not do this! Most investors are purely investing based on achieving a highly profitable exit. Normally sooner rather than later. That’s how they make their money.
No investor can go in without an exit strategy in place. So, not having an exit strategy or saying you’ll never sell or go public means you don’t have anything to offer them. If that’s how you feel, equity fundraising isn’t for you. Also, never talk about an exit strategy immediately, as investors may think you are in it for a quick win which shows a lack of commitment. Instead, only talk about a potential exit scenario if investors are the ones that ask you.
Pitch Deck No-No #7 – All I Have to Do is Build My Product, and the Customers Will Come:
No, they won’t. If that were true, more entrepreneurs would be funded. Asking investors for money so that you can “build your superior product” is a no-no. Why should they invest their money if you have invested nothing yourself yet, or worse, not even started building a prototype product and at least done some market research to see who will buy this? By saying it, investors will know you are naïve and not credible. Only three ways exist to create revenue:
- You can “buy” a customer. That is, you can spend resources (usually money) to raise awareness of your product, you can pull or push leads to you, and you can spend more resources to convert those leads into customers,
- You can convince existing customers to buy more, or buy more often, or not stop being your customer, and
- You can encourage existing customers to convert non-customers to become customers.
That’s it! Nowhere in this list is “build my product, and customers will come.” Creating and growing revenue takes work. Plain and simple.
Pitch Deck No-No #8 – The Market is So Huge; All We Need to Do is Capture 10% of 1% of It:
This might sound impressive, but it sounds ignorant to a seasoned investor. Investors want to invest in market leaders; they want you to have a large per cent of some market. Market leaders lead. Market laggards lag. Bragging about a “huge market” and the sufficiency to “make millions” from capturing a tiny share demonstrates that you don’t understand the dynamics of focusing.